Chemical Industry Awaits New Plant Site Security Rules

The chemical industry takes seriously the issue of maintaining an appropriate level of plant site security. Since the tragic events of 9-11, members of the American Chemistry Council (ACC) alone have invested more than $3.5 billion enhancing security at their facilities throughout the US. Trade associations such as the ACC, Synthetic Organic Chemical Manufacturers Association (SOCMA), National Association of Chemical Distributors (NACD) and the National Petrochemical & Refiners Association (NPRA) have developed various security management practices for their members to implement and maintain security programs, with implementation often necessary for continued membership. As much as 90% of industry companies have security programs in place at this time.

New Legislation

The legislation passed by Congress grants DHS the authority to establish national performance standards for chemical plant site security and to visit U.S. chemical facilities to evaluate security systems and require corrective actions where appropriate. The department will also have the authority to shut down chemical plants that fail to comply with these standards. DHS must within six months issue an interim final rule establishing risk-based performance standards for security at chemical facilities. Vulnerability assessments and the development and implementation of site security plans must be included in the regulations. DHS will have this authority for three years.

Industry associations and companies potentially affected by the new regulations currently await expectantly the issuance by DHS of an advance notice of an interim final rule, which will be the first step in the rulemaking process. The notice is expected some time in December. The department must issue interim final regulations by April 4, 2007.

How DHS will define high risk remains a key question that will hopefully be addressed in the upcoming notice. Most likely the department will consider the quantity of hazardous materials, proximity to populations, potential for a facility to be used as a weapon, and possibly economic impact of the loss of a facility, among other factors. The performance standards developed by DHS must then be based on the various levels of risk identified.

Each facility will have flexibility in developing a security plan to address any deficiencies uncovered through the vulnerability assessment. DHS cannot reject a site security plan based on the presence or absence of specific measures. However, the department can disapprove of a plan if it fails to meet the requirements of the regulations. This section of the legislation prevents DHS from mandating specific measures such as the use of inherently safer technology (IST), which in general is a chemical engineering philosophy developed by the industry in the late 70s that uses traditional engineering, chemistry and other scientific principles to reduce the risks associated with chemical processing. In the context of security, however, certain groups use the term IST as shorthand for the substitution of hazardous chemicals with safer alternatives.

Importantly for members of industry trade groups, the legislation includes a provision for acceptance by DHS of alternative security programs established by private sector entities and federal, state, or local authorities that the department determines meet the requirements of the interim regulations. The voluntary programs developed by SOCMA (ChemStewards), ACC (Responsible Care® Security Code), and NACD (Responsible DistributionSM) will likely be considered. The Maritime Transportation Security Act of 2002 (MTSA) is one specific federal regulation mentioned. Facilities in compliance with the MTSA (over 60% of NPRA members) security requirements will not be regulated by DHS. Other exclusions include Public Water Systems, Treatment Works, and facilities owned or operated by the Department of Defense or the Department of Energy, or any facility regulated by the Nuclear Regulatory Commission which are already regulated by other agencies for security.

The interim nature of the legislation is, on the other hand, of concern to the chemical industry. The language included in the DHS appropriations bill received approval at the last minute after more comprehensive chemical plant site security legislation failed to get full floor votes in both the House and Senate. The regulations that will be developed by DHS will expire in 2009. After the department issues its interim rules in April, 2007, companies will have some time -- perhaps six months or so -- to develop and implement their security plans. DHS will then have two years to enforce these new regulations. The expectation is that more comprehensive legislation will be adopted within that time.

Initial Industry Response

SOCMA, ACC, NACD, and NPRA all have responded favorably to the interim legislation.

"Throughout the legislative development process, SOCMA has been supportive of laws that accurately reflect the need for site security but that provide flexibility to each individual company to choose how to meet requirements for their facilities," says Jim Cooper, Senior Manager of Government Relations for the association. Rob McArver, Director of Government Relations at SOCMA adds that it was important for the legislation to be focused on security and not on issues that are already regulated by other agencies. "SOCMA is supportive of the new legislation. The committees did a good job of capturing the key need for oversight but still maintained flexibility in methods of compliance so that the impact for smaller manufacturers and batch operations will be reasonable," he notes.

The impact of the new site security regulations to be developed by DHS on SOCMA members should be fairly minimal, according to McArver, because member companies already must comply with the association's ChemStewards program, which includes requirements for plant site security. "There may be some additional requirements for facilities placed into higher risk categories, but smaller companies in remote locations should be lower risk facilities and will hopefully already be meeting or exceeding any performance standards developed by DHS," he states. "The appropriate focus of the standards will be on higher risk facilities. The purpose of the legislation is to protect the country, so the standards should be focused on those facilities that would be the most attractive targets for terrorists looking to make a large and devastating impact."

SOCMA also developed a Security Vulnerability Assessment model designed for small batch and custom manufacturing facilities, has held regular workshops on plant site security for its members, and plans to develop workshops and web conferences to help assist its members with their compliance efforts once the new DHS regulations are introduced in 2007. As a member of the Chemical Sector Coordinating Council (see below), SOCMA continues to play a key role in helping to organize the Chemical Sector Security Summit (previously the Chemical Security Summit) along with DHS. The next meeting is scheduled for June 11-13 in Washington, D.C.

Not unexpectedly, the ACC also supports the new plant site security legislation. "This measure represents significant progress in the effort to secure America's chemical industry, an essential part of the nation's critical infrastructure," says ACC President and CEO Jack N. Gerard. "Members of different associations have voluntarily implemented security programs, but facilities not covered by voluntary programs need to be regulated," adds Public Affairs Director Scott Jensen. "This new legislation provides the necessary oversight to ensure that all facilities at risk are required to have security plans and programs in place."

In particular the organization was pleased to see that the legislation grants DHS the permission to recognize the voluntary efforts taken by the chemical industry. "Our members have implemented security enhancements required by our Responsible Care® Security Code, and these measures have been audited and verified," Jensen says.

The RC Security code was proactively developed as a means to address chemical plant site security while Congress developed legislation containing federal guidelines. The elements incorporated into the program were created based on input from security professionals such as Sandia Labs. "It is important that the RC Security code be recognized as not just an industry program, but as a program based on the input of numerous security professionals," stresses Jensen. "The methods used in the vulnerability assessment are based on methods used in many other industries."

Immediately on the horizon for ACC is the organization of a ChemSecure summit for its members. The event, which is to be scheduled following the promulgation of the interim final rule, will provide a forum for educating member companies on the new regulations and helping them to understand what is needed for compliance.

NPRA's Director for Security Maurice McBride says that NPRA commends the House and Senate for passing the legislation to grant DHS authority for developing chemical plant site security regulations. The association is also pleased that the legislation recognizes the importance of protecting vulnerability assessments and specific site security plans from unwarranted and problematic public disclosure. Exclusion of facilities covered by the MTSA was also an important facet of the legislation for many NPRA members.

Approximately 60% of NPRA members (and many ACC members) are already subject to the Maritime Transportation Security Act (MTSA), the Coast Guard administered program for chemical facility security at facilities with a shoreline. Some of the MTSA program elements include vulnerability assessments, security plans, and the use of security officers. Companies often implement their security programs at all facilities whether they are covered or not. NPRA, together with the American Petroleum Institute (API), also developed a Security Vulnerability Assessment Methodology approved by DHS for use in the petroleum industry, and holds frequent workshops on security for its members.

McBride hopes the passage of the legislation and the recognition of many voluntary industry programs will help dispel the notion that the chemical industry isn't doing anything to improve the security of its facilities. "Chemical companies have a vested interest in improving plant site security," he says, "and they really do work hard to ascertain the level of risk and implement appropriate measures to address that risk. They have employees and communities to protect, not to mention their investment and ability to continue to operate."

Like ACC, NACD is pleased with the passage of the new chemical site security legislation because it will level the playing field. "Our members are required to comply with a formal security program as part of our Responsible Distribution ProcessSM initiative. Companies not belonging to trade groups that require implementation of formal security programs need the oversight of an independent agency like DHS," asserts President and COO Jim Kolstad.

As part of its Responsible Distribution ProcessSM (RDP), NACD requires compliance with mandatory security measures. To aid its members, the organization developed a security vulnerability assessment methodology. "We are starting our third verification cycle," notes Kolstad. "Members have gone through the verification process twice already. The process includes verification of continuous improvement activities through compliance with Responsible Distribution ProcessSM requirements, which gives the program teeth and measurability," he adds.

Remaining Concerns

While all four trade groups support the new chemical plant site security legislation, they all agree that it comes up short in two specific areas.

Firstly, the legislation lacks a clear provision on federal pre-emption. Chemical plant site security is a national issue. The legislation addresses national security issues and therefore regulations promulgated under its auspices should preempt any state level requirements, according to Jensen. "We would prefer that a statement expressly granting federal preemption be included in any future legislation," adds McArver.

The three year sunset provision is cause for concern for various reasons. While some of the members of these associations will likely have facilities that meet the new national performance standards, some likely will not. These companies will make substantial investments, in terms of dollars and other resources. "It is not unreasonable that our members want to be assured that they will not be required to spend additional resources on different measures in three years," McArver explains. "Our members need to know that when they make significant investments in security programs that they are doing so for long term and that the requirements won't change in a couple of years," adds McBride. NACD is also disappointed in the level of protection for sensitive information provided in the current language.

The interim nature of the legislation may provide the now Democrat-controlled Congress an opportunity to introduce other requirements into plant site security legislation. "Although the legislation could be extended, with the Democrats in control of the Congress, there is a concern that the sunset provision will be used as a means to reopen the debate about inherently safer technology and its relevance to the national security performance standards," Kolstad comments.

"It is important to remember, though," Jensen notes, "that the current legislation was achieved in a very bipartisan fashion, and the hope is that a similar approach will be taken in 2009." NACD already has aggressive plans for educating new members of Congress. "We need to work with the new members to educate them about chemical policy and the industry," Kolstad says. "We must get the message across that we will continue to be responsible corporate citizens and be as safe as we possibly can and do everything we can to prevent any accidents that involve human error or are caused by terrorism."

Anticipating the Future

These chemical industry trade groups continue to build on the relationships they have developed with members of Congress and personnel at DHS. The Chemical Sector Coordinating Council was established as a vehicle for communicating with DHS and other federal agencies on security-related topics. The council meets frequently to discuss a wide range of issues, including developing a public/private plan for protecting the industry and working out better methods of communication.

"The relationship with DHS is currently very positive," notes Bill Allmond, Director of Regulatory & Public Affairs for NACD. "While the agency is very serious about addressing security vulnerabilities, the working relationship with industry is positive and cooperative."

Others are hopeful that legislation won't change that good relationship. "The DHS and industry have created an outstanding working relationship in the shared fight against terrorism. This working partnership has been very effective in enhancing industry's ability to focus on those security threats that exist today and the potential threats that we may face in the future," comments McBride. "NPRA and its members look forward to continuing this security partnership as the Department develops the interim final regulations."

ACC and SOCMA, too, will work closely with DHS as it develops regulations that build on the programs crafted by these industry organizations and their member companies. All parties involved should also take a moment to recognize what has been achieved. "It is important to take a look at the entire development process, considering how industry, Congress, and DHS got to this current point and how things will go forward," Jensen stresses. "While the current legislation may not be the preferred one, we shouldn't ignore the nature of what has been accomplished. We will have national chemical security regulations and DHS will have the authority to shut down noncompliant facilities. The nation will be more secure as a result."

Additional note: DHS on December 15, 2006 issued a notice of proposed rulemaking to address the security of the rail transport of highly hazardous substances through urban areas. The proposed rule is part of a package of new security measures that will require freight rail carriers to ensure 100 percent positive hand-off of Toxic Inhalation Hazard (TIH) materials, establish security protocols for custody transfers of TIH rail cars in the high threat urban areas, and appoint a rail security coordinator to share information with the federal government, as well as formalizing the Transportation Security Administration's (TSA) freight and passenger rail inspection authority.

About the Author

Cynthia A. Challener (challener@vtlink.net) is Principal Consultant at C&M Consulting (www.candmconsult.com). C & M Consulting offers technical writing, editing and research services to the chemical and allied industries. Services include the development of marketing brochures, technical bulletins, presentations, and feature articles. In addition to her work for ChemAlliance, Dr. Challener has provided services to a wide variety of chemical industry clients, including Chemical Market Reporter, ACS, and SOCMA.